Hong Kong PCCW, Telstra Agree To Raise Interest On JV Loan
Monday January 8 8:26pm
Source: Dow Jones
HONG KONG -(Dow Jones)- Pacific Century CyberWorks Ltd. (PCW) and Telstra Corp. (TLS) have agreed to raise the interest rate margin on the US$1.5 billion syndicated loan arranged for their joint venture, the lead arrangers said Tuesday.
The move follows the adjustment of terms on a larger loan being arranged for PCCW alone, although the increase on the Internet Protocol Backbone Co., or IPBC, loan is 10 basis points less per tranche than that on the US$4.7 billion PCCW loan, they said.
Still, it is in line with earlier statements from PCCW and Telstra that there would be only a marginal difference on the pricing between the two loans, said Paul Bartlett, managing director and co-head of the debt business at Chase Manhattan Bank, which is joint lead arranger of the IPBC loan.
The arranging banks said the interest rate margin on the US$300 million three- year tranche will be increased by 25 basis points to 75 basis points above the London Interbank Offered Rate. The margin on the US$825 million five-year tranche will be raised by 40 basis points to 105 basis points over LIBOR. For the US$375 million seven-year tranche, the margin will be raised by 55 basis points to 135 basis points over LIBOR.
Bartlett noted that the increase wasn't prompted by the banks, but rather PCCW and Telstra had volunteered to raise the margin.
"They didn't have to, but they wanted to make sure that the banks that had already committed were happy," he said.
The two lead arrangers, which also include Barclays Bank PLC, said the increase is also a reflection of the recent deterioration in sentiment on telecommunication companies, but said the new rates also reflect the strength of the international backbone company.
(This story was originally published by Dow Jones Newswires)
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